In some environments that are able to support it, I think it's easier just getting rid of them and create a "constant feedback" but that takes training, time, investment, and continual effort from everyone. Whereas, the traditional performance evaluation method is easy, simple, and everyone knows how it works.
Small businesses need to be careful with develop a "packaged" performance evaluation plan and schedule. It can manifest an environment where managers withhold feedback and rewards until the performance evaluation (because you require it) and employees don't speak up until they're asked (cause that's the only time we ask).
To truly make performance evaluations worth their weight try a couple of things:
- Do them more often. The annual review is really a thing of the past. There's really no way to evaluate an employee once a year. There's too many projects, too many breaks in employment, and too much to cover in a year. Try doing them quarterly and creating a more comprehensive reward system to go with it (annual increases based on cumulative points, etc.)
- Don't use generic evaluations/surveys for everyone. If you pulled a generic performance evaluation from the internet and you're using that for all your employees, stop. Each one needs to be tailored towards the specific job description and department/division the employee is employed. The same should go for exit interviews or employee surveys. If you want similar line of questioning then create a portion that is generic, but be sure to include a job specific portion that allows feedback as it directly relates to their job role.
- Do your performance evaluations on time! I'm not a fan of them in general, but my biggest gripe with performance evaluations is the follow through, and mainly as it relates to the employees. I've worked in many different businesses, for many different fields, and in every single one I've worked for they've had a "performance evaluation calendar" and not once, has it ever been conducted responsibly. Time after time I will get emails from employees asking "Can you tell me when my performance evaluation will be done... I'm still waiting?" Managers don't take it seriously. Is it the paperwork, the time, the hassle? Perhaps. But that's not what matters, what matters is the perception that is given to the employee. When we state that we will do something, in the employee manual or verbally, we better do it. Otherwise, the employee will feel under-valued. Regardless of our best intentions. Remember the saying "actions speak louder than words. "In many cases manager's seem to chock up an employee fussing about performance evaluations to "They just want a raise." And chances are, they're right. But again, when you've created a system that only monetarily awards employees based on performance evaluations, then they expect it to be done. And be done timely.
- Train your managers.Don't just hand your managers a form with instructions and expect them to get them done. Sit down with the managers and go over step by step how they should work. Beyond that, also guide them through the method of effective feedback and the competencies they should be focusing on. The more comfortable and assured the managers are of your performance evaluation process, the more likely they will do it.
If you're going to have a performance evaluation system, then make it one that adds on to the current feedback process. Don't have a current feedback process, check out my post on Blogging4Jobs that gives some good insight on methods of eliciting feedback from your employees.